3. Jaylin makes a 25-year loan of 150,000 to Susan. Susan needs to repay this loan by level end of year payments R. Jaylin will replace her capital via a savings account which offers annual effective interest rate 6% and earn an APY of 4%. Find R.

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.